Plan panel backs for-profit institutes of higher learning

Plan panel backs for-profit institutes of higher learning

New Delhi: In a potential game-changer for India’s education sector, the Planning Commission has suggested that the country allow establishing institutes of higher learning that could be run for profit.

“The not-for-profit tag in higher education sector should perhaps be re-examined in a more pragmatic manner so as to ensure quality without losing focus on expansion and equity," said an approach paper prepared by the apex planning body. Mint has reviewed a copy of the document.

To be sure, the approach paper is not a final policy document as it requires formal approval by the Union cabinet of ministers. However, it does signify the government’s willingness to allow for-profit institutes of higher education to be set up.

India should facilitate private sector growth in higher education, particularly in technical subjects, and should explore and develop innovative public-private partnerships (PPP) in the 12th Five-year Plan period that begins on 1 April 2012, the Planning Commission said in the approach paper.

The move comes at a time when the government has publicly accepted that India needs to scale up the education sector to reap demographic dividends, but the state alone will not be able to help fund all initiatives.

The suggestion to permit for-profit institutes has come out of a public debate on the quality of higher education in the country, according to a Planning Commission official.

“There were a large number of suggestions made on allowing for-profit higher education from different stakeholders," he said, requesting anonymity. “In a presentation made to the Prime Minister in April to discuss the approach paper, it was suggested that there should be development and operationalization of PPP models in higher education looking at the growing needs of the economy."

“PPP will not come at not-for-profit," said the official, who is closely associated with the drafting of the approach paper.

For the country to achieve scale with quality in higher education, public money is not enough, said Pramath Sinha, who was founding dean of Indian School of Business (ISB), Hyderabad.

“You have to invite private investment," he said. “Of course, some will be philanthropic, and the others will come to have some returns."

Promoting PPP and allowing profit with conditions are interesting ideas and will be beneficial if implemented, he said.

“Already people are doing it under the carpet. By not making it transparent, you (government) have created a system of bootleg model," said Sinha, who is now working on setting up a multidisciplinary higher educational institution.

“But yes, you have to put curbs so that anybody should not enter to make profit while offering poor quality education," he cautioned.

But the proposal may not be well-received in the political sphere. “I am surprised that this is coming from the Planning Commission," said K. Keshava Rao, a Congress parliamentarian and member of a parliamentary standing committee on human resource development. “Commercialization of education has never been accepted in India and should never be."

“Foreign universities waiting to enter India will jump into the fray once this is finalized," he said.

T.V. Mohandas Pai, former human resources director at Infosys Ltd, said: “The central government has too much restriction. Government restriction has only created a class of people but we have to go for the masses. I think there should be no debate on for-profit or not-for-profit as long as access and quality is taken care of."

“Only 13% of those eligible are pursuing higher education (in India) and this has to increase. For this we have to give access and quality and here inviting private sector would be a good move. I welcome this, if the Planning Commission has suggested it," Pai said.

“We have to look at outcome. You will see more people coming and joining the sector," said Pai, who is associated with educational institutes, including the Bangalore University.

India has nearly 26,000 institutes of higher learning and over 530 universities catering to 16 million students. The country needs some 30,000 additional colleges to increase its gross enrolment ratio to 30% from 13% in a decade, according to official estimates.

Pai said there is a huge problem of quality faculty, who are often not well-paid. “We have to address this also," he said, indicating that for-profit organizations will pay more to teachers and attract better talent.

All central government institutes, including the premier Indian Institutes of Technology, face a faculty shortfall of up to 33%, according to data available with the human resource development ministry.

Some corporate houses are opening higher educational institutes under state laws because some of the states are doing a good job by allowing it, Pai said. These include Azim Premji University in Karnataka, Shiv Nadar University in Uttar Pradesh and NIIT University in Rajasthan. These institutions are not-for-profit.

Foreign universities will show interest in setting up campuses if the government re-looks the not-for-profit tag in higher education, a human resource development ministry official said, requesting anonymity.

“This is the most contentious part (of the foreign university Bill) that you allow them to set up campus but not earn any return," he said. “They cannot even expatriate the income. This part needs some relaxation."

Once the government allows for-profit educational institutes, there will be three benefits—the practice of giving free land or land at concessional prices will stop, the institutes can be asked to give audit reports of income and expenditure, and there could be some guidelines on the selection of executive boards of the institutions, according to another government official, who too declined to be named.

ISB’s Sinha agreed and added that if the proposal is unpalatable for political reasons, there could be a rider that “profit is allowed, but only 15% per annum". “They can also asked to audit their book by the leading audit firms of the country to avoid malpractice," Sinha said.